Obama's Missing Principle on the Buffett Rule

Pity the poor aide operating the White House Twitter account yesterday who wrote “principal” instead of “principle” in a sentence describing the Buffett Rule named for billionaire investor Warren Buffett. As the aide unwittingly suggested, a tax plan built around the circumstances of one CEO is less about principle than, well, a principal.

The tweet came on a day when President Barack Obama gave a speech dragging out the tired claim that Buffett pays a lower tax rate than his secretary. What would otherwise pass as office gossip has become the driving force behind a policy campaign for tax fairness that ever so conveniently intertwines with Obama’s reelection campaign.

Since January when former Massachusetts Governor Mitt Romney disclosed paying about 14 percent in taxes on more than $20 million of income, Obama has badgered Congress to pass a minimum tax on households earning more than a million dollars a year. The White House has branded this proposal as the Buffett Rule, but even mainstream reporters asked yesterday whether it would be better called the Romney Rule.

Either way, naming a tax after one rich private citizen makes for poor public policy. True, there is a long history of regimes passing bills that single out and strip individuals of property and privileges, but thankfully this is not America’s history.

If there is a broader problem with the wealthy not paying their fair share, why build the argument around Buffett, a man whose $44 billion fortune puts him in a class all by himself? By comparison, even Romney looks middle class.

The best answer is the most obvious one: Obama clings to the exceptional story of Buffett and his secretary precisely because it is an exception. By the White House’s own numbers, households in the top .1 percent of earners pay an average of 26 percent in taxes while middle class filers average only around 16 percent.

In his speech yesterday in Florida, Obama spoke about how “a shrinking number of people are doing really, really well,” and he would know because his aides have been combing through data to find evidence of other people in Buffett’s shoes, i.e., more speech examples. The White House recently released a report with the results. “Warren Buffett has famously stated that he pays a lower tax rate than his secretary, but as this report documents this situation is not uncommon,” the preamble reads.

Yet all the evidence that follows in the report suggests that the situation is incredibly uncommon. “The distribution of taxes paid among the 400 richest Americans is particularly striking. One out of every three in this group of the most financially fortunate Americans paid less than 15 percent of their income in taxes in 2008,” the report reads – never mind, that many of these supposed robber barons see their money taxed at the corporate level before the individual rate even kicks in.

But is one-third of 400 Americans the best that the White House could do? That comes out to 133 tax filers not paying their fair share. By some accounts, Senator Joseph McCarthy claimed to find more Communists working at the State Department.

No wonder Obama bristles at accusations of class warfare. This isn’t about class. It’s about specific people. One almost expects to see names and addresses in the White House report, so the mob can get out the pitchforks and torches.

While these 133 households are not representative of a larger problem, Obama’s tactics in this debate have been. Throughout his presidency, he has shown a dangerous tendency to personalize public issues in polarizing ways.

Consider the events of the past month: First, without having all the facts, Obama gave an emotional statement about an already emotional police investigation in Florida. Then, he disputed the Supreme Court’s right to overturn his landmark health care law with language that sounded like a direct challenge to the justices. And last week, he thrust Augusta National, the home of the annual Masters golf tournament, into the middle of the so-called war on women by calling for the private club to admit female members.

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Today it is a constitutional democracy not a constitutional republic. You want to live in the past when it suits your purposes and in the present when it suits your purposes. You can’t have it both ways. Get REAL!!!

The principal behind the Buffet Rule is the American electorate. Convince them, if you can, why the majority should live on less so that the wealthy can keep more. Prove to them beyond a reasonable doubt (no abstract numbers, please!) precisely how many more jobs the wealthy will create if they’re not taxed more, where the jobs will be located, how much they’ll pay, what benefits will come with them, how long they’ll be around.

Most folks at home are skeptical of supply-side claims these days, especially in a global economy. Many folks feel” a bird in the hand is worth two in the bush.” Unless the tax breaks for the wealthy can deliver what is claimed, there is no incentive for the American People to go along with them.

So unless tax breaks for the wealthy can be explained- you will continue to forcefully take more of their money for ideas you come up with?

It’s interesting to see how your camp constantly comes up with ideas (but never the money to pay for them) but the supply-side economics you decry are responsible for helping nearly one billion people on earth out of the poverty level and into the middle class over the past decade. Hundreds of millions of those people are in China, which moved away from a centrally planned society and just flirted with capitalism. Look at the wonders it does. Of course, your camp claims globalization is an evil because your blue collar workers and their enshrined rights are threatened.

You cannot prove how many jobs the wealthy will create because the actions and aspirations of millions of individuals cannot be calculated. Additionally, economic environments, healthcare implications and consumer demand add to conditions that must be considered in such circumstances. Almost every corporate CEO has said, over the past three years, that they could not begin to hire more people until the tax environment and their health care obligations were made more certain. Businesses cannot invest in a period of uncertainty.

Additionally, I notice you always claim we need more money for the government (which I’m sure you would agree, are terrible stewards of taxpayer money), but you never suggest that we lower our costs. The government takes 45% of every penny created and earned in this country every year. As a point of reference, the Dow Jones Industrial Average has returned 450% over the past 20 years, with an annualized rate of around 12.5%. Please explain to me the return on investment we’ve seen from our government, as they’ve annexed half the wealth that could have been invested in our industry (which, you might be surprised to learn, is actually the camp that hires people).

And aside from that, why would successful people give you a good reason to not share their money with you? Is that really the America you think you live in? What do you imagine Thomas Jefferson meant when he suggested we have a “wise and frugal government?” Or James Madison who held that the government is not in the business of charity.

America is different from the rest of the world in that we do not believe that the government should serve as the middleman between wealth and the population. We create Facebook, Google, Apple- not the Europeans or the Japanese. Our culture of self-reliance, risk and free market capitalism creates the biggest businesses (which are the employers who create the jobs you want) in the world.

Liberal democracies have given the free markets the room and latitude to operate without government intervention since Adam Smith penned the Wealth of Nations in the same year that Jefferson penned the Declaration of Independence.

However, I would counter that if you don’t like the capitalist system, give North Korea a shot and let me know how that works out for you. Your idea of wealth redistribution has been mastered there, everyone is equal, no one has anything more than anyone else, except of course, party officials.

More bunk! The Commerce Clause gave the people, through their congressional representatives, the power to regulate Big Business. Interstate and international commerce must be in line with the public interest. When it isn’t, our representatives are failing us. It is inconceivable that a democratic majority would put the interests of the few above their own interests, that is, the interests of the many!

When I read the interstate commerce clauses in Article 1, specifically in 8, 9 & 10, they seem to refer to States imposing duties on the exports and imports of other States. How does this reading square with your interpretation of the interstate commerce clauses? What about Madison’s explaination in Federalist No. 42?